UPPER
MIDDLE-INCOME COUNTRY - ECONOMY
News:
India's GDP expected to
grow at 6.8% in FY25, to attain upper middle-income status by 2031
What's
in the news?
●
The Indian economy is set to witness
significant growth, with projections indicating a GDP expansion of 6.8 per cent
in the next fiscal year.
●
This growth trajectory positions India to
attain upper middle-income status by
2031, with the economy expected to double to USD 7 trillion.
Key
takeaways:
●
According to the India Outlook report by
Crisil, the country's economic progress will be supported by domestic
structural reforms and cyclical factors.
●
Crisil anticipates that India could
potentially even surpass its growth prospects, aiming to become the world's third-largest economy by 2031.
Middle
Income Countries (MICs):
●
The world’s Middle-Income Countries (MICs)
are a diverse group by size, population and income level.
Classification:
●
Lower
Middle-income Economies - those with a GNI per capita
between $1,086 and $4,255.
●
Upper
Middle-income Economies - those with a GNI per capita
between $4,256 and $13,205 (2023).
Importance:
●
Middle-income countries, encompassing 75%
of the global population and 62% of the world's impoverished, contribute to approximately
one-third of the worldwide gross domestic product (GDP).
World
Bank and MICs:
●
The World Bank Group continues to evolve
its partnership with MICs, working with them simultaneously as clients,
shareholders, and global actors.
●
The World Bank provides increasingly
tailored services - financial
products (loans, guarantees, risk management products) and knowledge and
advisory services (including on a reimbursable basis) to support MICs in their
global roles, to address their second-generation reform challenges, and to
facilitate knowledge exchange and South-South cooperation.
India's
Status:
●
Until 2006, the World Bank classified
India as a low-income country.
●
In
2007, India moved to the lower-middle income country
and since then has remained there. India’s per capita GDP stood at $2,390 in
2022.
●
According to the latest government data,
India's per-capita income stood at ₹1,69,496, or $2,040, in FY23.
India's
Growing Stand:
●
India, recognised as the fastest-growing
economy among G20 developing nations, is setting its sights on transitioning
into a developed economy by 2047.
●
According to India Ratings and Research
(Ind-Ra), the current estimated GDP of $3.6 trillion in FY24 could pave the way
for India to enter the upper-middle income category between FY33 and FY36, reaching a milestone
of a $15-trillion economy by FY47.
●
Ind-Ra's estimates suggest that India's
per capita income could range from $9,218 to $9,920 between FY43 and FY47. This
projection places India in proximity to the high-income country threshold of $13,846 per capita.
●
Beyond economic indicators, Ind-Ra
identifies key factors influencing India's economic trajectory, including energy transition, low carbon
manufacturing/services, and the expansion of the middle class.
●
The focus on low-carbon products and
services, as exemplified by India's first green hydrogen plant-based stainless
steel manufacturing facility commissioned in March 2023, is expected to
contribute significantly to India's growth.
●
The rising
incomes and aspirational lifestyle of the middle-income class are
identified as key drivers of demand for goods and services.
●
According to People Research on India's
Consumer Economy, the middle-class population is projected to grow
substantially, reaching 715 million in 2030-31 and 1.02 billion in 2046-47.